4.1. Hurdles in JNNURM Project Delivery
This section introduces the JNNURM project timeframe and discusses the project delivery hurdles according to the planning and design, implementation, and operation and maintenance phases of a project.
4.1.1. Program Timeframe
The JNNURM’s inherent characteristic of being a ‘mission’—a results-oriented, time-limited program—was identified as one of the main project delivery hurdles. The JNNURM projects had seven years from the initial establishment of a CDP—a prerequisite for project approvals and fund releases—through to project implementation and completion. Seventeen respondents shared the opinion that the limited time was the root cause of time and cost overruns. Since it typically took a few years to establish the CDP and DPR and to undergo the bureaucratic procedures for project sanctions, this left insufficient time for the project implementation itself.
Another characteristic of the JNNURM was a competitive atmosphere. When the GOI called for proposals (DPRs), the time pressure to prepare the proposals forced the participating agencies to focus on the sanctioning of their proposals and to submit proposals that were not well reviewed. Furthermore, in order to be sanctioned, some proposals tended not to articulate anticipated challenges. Regardless of their feasibility, the proposals assumed conditions that would be advantageous for project implementation and were far from the realities on the ground. Time and cost overruns were considered to be unavoidable due to the gaps between the plans and reality. Hence, the JNNURM’s time limits and sanction-oriented project landscape can be directly associated with project time and cost overruns.
4.1.2. Planning and Design
The short timeframe and competition for project sanctions increased dependence on external consultants and exacerbated disconnections between the plans and the local context. The authorized agencies hired private consultants in many cases to prepare the CDP and DPR, with the local government playing only a minor role. Some respondents emphasized prevailing practices in DRP preparation: the same consultant would be hired by different municipal corporations to prepare their DPRs, which tended to produce similar DPRs in different cities due to the absence of surveys at the grassroots level and field studies.
The gaps between the plans and ground realities created diverse problems for the implementing organizations. Land acquisition was the most frequently cited problem (31 respondents). Generally, the availability of land is critical in large-scale infrastructure projects. In many of the JNNURM projects, however, there was not sufficient time during project planning to secure land, or even to confirm the availability of the land. Therefore, the project proposals did not include accurate information about the land, and problems involving the land arose in the project implementation stage. For example, a respondent in Uttar Pradesh admitted that they had not checked the land availability during project planning, and he highlighted that this situation happened in many other states as well.
Furthermore, land acquisition was reported as creating conflicts, with many conflicts ending with a lawsuit (33 respondents). When a lawsuit is filed, the part of a project related to the lawsuit has to halt because of the possibility of a design change, causing a delay. The lawsuits were also described as causing cost increases due to land compensation. The unrealistic plans prepared by the consultants were also described as not reflecting the opinions of locals. The lack of consensus on the projects that created conflicts between the stakeholders sometimes resulted in lawsuits.
Interview respondents also reported cases where plans were not well developed due to a lack of data. Older urban areas in India usually have complex underground utilities and were often developed individually without a comprehensive plan. Many respondents indicated that because of insufficient data, it was difficult to map the existing utility lines and to include them in their plans.
Certain project activities required permission from certain authorities, and the slow procedure for intergovernmental approvals was another critical problem in the Indian urban sector. It was common for an authority in charge of other public facilities to delay approval for the implementing agency’s activities in its jurisdiction, and 33 respondents stated that delayed permission was the main reason for a project delay.
For reasons such as impractical designs, local opposition, and lawsuits, some implementing agencies needed to change their project designs and estimates and to go through complicated bureaucratic procedures to obtain additional approvals. Getting approval for a revised DPR took a few months or years, and in some cases, the GOI did not permit a revision. In summary, unrealistic plans due to a disconnect with the local context and a lack of data created a diverse range of problems for project implementation, leading to delays and cost overruns.
Most of the JNNURM projects that experienced problems at the project planning stages also experienced problems during the project implementation stage, such as improper contract management, on-site physical constraints, and financial constraints. Sixteen respondents mentioned the tendering process as a problem. Many implementing agencies were dependent on consultants and unfamiliar with the tendering requirements for project implementation. Some implementing agencies called for tenders without meeting certain conditions for bidding in the program. In such cases, the GOI would ask for a re-tender because of the unsatisfied conditions, and repeating the process led to project delays.
The JNNURM was a nation-wide program, and many projects were initiated across the country at the same time. Some projects in the JNNURM were different in size and modality from previous urban projects. Even though there were many contractors in India, the supply of qualified contractors for the JNNURM projects was less than the demand. In some cases, there were not enough bidders who met the minimum qualifications, and the implementing agencies had to repeat the tendering process until they had the required number of qualified bidders (16 respondents).
The lack of qualified contractors was closely related to the experience and level of expertise of local contractors (nine respondents). Before the JNNURM, implementing agencies in the urban sector cooperated with local contractors. However, the local contractors were not capable of executing the JNNURM projects, which were large-scale infrastructure systems in various sectors. One respondent in Gujarat explained the situation as follows: “The [local] contractors, who were working for [City X], … may fill the tender, [but] when you evaluate them, you [discover] that there is only one [eligible] contractor among three or four.” Even if the bidders were qualified and met the criteria for selection, there were cases where the bidders were not able to execute the project. If the actual capability of the contractor who was awarded a tender was not sufficient to implement a certain technology or address complaints relating to logistics, the contract needed to be terminated during project implementation.
Another problem encountered in tendering was the lack of local knowledge (12 respondents). Due to a lack of experienced local contractors, the implementing agencies needed to hire outside contractors who were specialized in a certain sector. The outside contractors were not familiar with the local context and had not formed local networks. The contractors needed time to establish local networks to obtain local materials and labor. Since the contractors needed to move their employees and bring labor and materials from their base region, the costs increased. Furthermore, as discussed above, many plans were not implementable, and the gaps between the plans and reality on the ground created many obstacles that could not be managed properly by incapable contractors. Similar to the lack of capable contractors, 12 respondents stated that there were insufficient construction materials and the quality of laborers was not good enough, which also contributed to project delays.
In addition, 26 respondents indicated that the financial structure related to project funds led to project delays and cost increases. After project sanctioning, the tendering system that selected the lowest quote created a financial problem. Four respondents explained that, when a tender was selected based on the lowest quote, cost overruns became unavoidable. The government rates were more likely to be lower than market rates. In the reported cases, both the bidder and implementing agency knew the estimated project cost was not feasible, but the tendering system allowed the bidder with the lowest quote to be awarded the tender. In this situation, the respondents argued the cost overruns were simply due to the difference between the market and government rates. The GOI’s unrealistic rate schedule created a more complicated structure for the project funds. In the case of cost overruns, the implementing agency could not pay the extra costs to the contractor without the GOI’s approval. Without payment, the contractors suspended projects, which delayed project implementation.
Another problem with any revisions to the cost estimate was the issue of who would bear the extra cost. When the revised estimates were approved, since the GOI typically did not cover cost overruns, state and local governments needed to bear the extra costs. In some cases, local governments were not able to pay the increased cost to the contractors, and projects were suspended or delayed until a resolution was found. Hence, the logistics related to the release of funds were closely connected to project delays (16 respondents).
Another reason for delays in releasing funds was related to the reform agendas. As a prerequisite for receiving funds from the GOI, state and local governments were required to implement mandatory and optional reforms such as increases in cost recovery and function transfers. The reforms were intended to empower local governments by transferring functions, funds, and functionaries from state governments, so most of the reforms needed to be adopted by state governments. However, there are cases where local governments implemented their mandatory reforms, but the state-level reforms were not adopted. In these cases, although the implementing agencies completed a certain part of the project implementation with the settled funds, the GOI did not provide the next installment for a project because of the unsatisfactory status of the reforms. One respondent in West Bengal emphasized: “[The] release of funds is also linked with the reform. Most of the local [governments] are not in a position to implement the reforms as described by the Government of India. So we are worried whether the fund[s] will be given or not.”
In summary, the most critical reason for the time and cost overruns was the vicious circle between project delays and cost increases. The project delays caused costs to escalate as time passed, and the price escalations required additional time for approvals from the central government level, a lengthy and complicated procedure that caused the project to be delayed further.
4.1.4. Operation and Maintenance
The factors leading to time and cost overruns in project implementation also influenced the operation and maintenance (O+M) stages of a project. In a number of cases where state governments led the program, local governments did not participate in project planning and implementation and were then made responsible for the O+M of a project. In these cases, the local governments were reluctant to take on the O+M responsibility. Since local governments were not involved in other stages of a project, they typically did not have enough staff who were equipped with the necessary knowledge and information about a project at the time of the project handover. Without extra staffing, the O+M of a project was an additional burden for existing local government staff (eight respondents). In addition to the lack of staff, the cost of the O+M was another reason behind the reluctance to take over a project. Sixteen respondents mentioned insufficient cost recovery via user fees. Due to a political decision by state governments, local governments were not allowed to collect user fees for urban services, and this became another conflict surrounding the handover of projects. One respondent explained this conflict: “Municipalities are afraid [that] if they take up the project … in [the] future … the state government [may not] have any money for them, [and] the entire burden will automatically come to them.” Without specific actions for cost recovery, the operation of a project could become a burden on local governments.
shows the complexity of the hurdles. The figure indicates how a problem at a certain stage of a project could become the cause of a problem at a later stage of the project.
4.2. Influence of Capactiy Factors on JNNURM Project Delivery
In India’s urban sector, most project participants did not consider a lack of capacity as a direct cause of project hurdles. In van Loon et al.’s [21
] study, the CD approach is emphasized as a systemic way to understanding outcomes. Through the lens of CD, this section analyses the project hurdles emphasized by respondents and their responses to the second research question.
4.2.1. Enabling Environment
CD is usually executed in diverse local contexts, where contextual factors need to be carefully considered in the design of interventions [4
]. Many respondents mentioned various contextual factors that create the enabling environment for a project. Because the JNNURM was a time-limited program that went through a short preparatory period, the projects were assigned to participating agencies based on the existing functions of agencies. The main authorities for project implementation varied depending on the states, which had different degrees of devolution. As a mandatory reform, devolution was pursued in all states, but the time-bound and results-focused characteristics of the program strengthened the existing institutional structure and established the roles of participating institutions based on the existing institutional structure.
Governance, one of the capacity factors at the enabling environmental level, influenced project delivery. In JNNURM projects, there were institutional overlaps that made it difficult to clarify responsibilities during project delivery. Fragmented institutional structures hindered coordination between institutions and were responsible for time and cost overruns. One respondent provided the following example: “There is no single entity for urban mobility … which allows [a] certain integration and cohesion of all the activities in that sector. … This is one of the reasons why such a big project, despite all the money and the political strength, couldn’t reach [its goal].”
Moreover, institutional overlap hampered the integrity and continuity of work related to different stages of a project. When local governments did not participate in project implementation, they were likely to become reluctant to take over the responsibility for the O+M because their levels of knowledge and ownership related to the project were low (nine respondents). The complicated bureaucratic procedures were originally developed to ensure accountability in project governance. There were many rules and regulations that participating agencies were required to follow, and in some cases, the rules and regulations were not relevant to the context around the project. As a capacity factor at the enabling environment level, the complex procedures combined with a lack of accountability were closely related to the reasons for time and cost overruns (16 respondents).
Politics is another frequently emphasized contextual factor in the literature, and there can be an unseen, complex interplay between politics and CD [4
]. In the case of India’s urban sector, some respondents considered political cooperation between the levels of government to be a fundamental component of project delivery.
As a contextual factor, the low availability of qualified contractors and human resources became a reason for the time and cost overruns. The large-scale urban projects in the JNNURM increased the demand for contractors with relevant skills and experience. Similar to the local governments, which did not function in certain urban sectors before the JNNURM, local contractors that collaborated with local governments did not have experience in large-scale project execution. The quality and quantity of qualified human resources and capable contractors was one component of the enabling environment that had a critical influence on project delivery. The following comment captures the challenge faced by the private sector: “Overnight, you cannot create experts in the country … This was the biggest problem when JNNURM came in. … So, it is not [just a matter of] capacity building for government engineers. … We also need to create a set of people in this country to take up challenges.”
4.2.2. Organizational Level
An organization’s ability to obtain and integrate resources, build inter-organizational linking, and manage information can be critical to its performance [25
]. In the JNNURM projects, one of the most critical factors for the creation of organizational capabilities was the devolution that the JNNURM pursued as one of its main objectives. The JNNURM basically aimed to achieve two contradictory objectives, namely, empowering local governments and implementing urban infrastructure projects quickly, and this contradiction led to many capacity challenges. The requirement to achieve the reform agenda as a prerequisite for fund installation is a good example of this contradiction.
In some states, contrary to the original objective, devolution was achieved only nominally to meet the requirements for fund release. One respondent in Uttar Pradesh indicated that the devolution was achieved in documents only: “They [local governments] are public representatives, [but they are] not given responsibility. … Power is not given to them. It is in documents, but in practice, it is not there.” In the JNNURM case, many local governments did not have a responsibility for project planning and design, so they were not involved in the planning and design process. Most DPRs for the JNNURM projects were formulated solely by external consultants, which created a problem where the DPRs failed to adequately understand the local context. In addition, the JNNURM was a time-limited program driven by the GOI, so the participating organizations did not need to restructure their organization for JNNURM project implementation. While a few organizations established a dedicated unit for the projects, most organizations distributed project-related work to departments that were already established or hired contractual employees using the designated JNNURM budget. This organizational structure was closely related to the fragmented management of the projects. The fragmented organizational structure proved to be a hindrance to inter-organizational communication and public relations, which had a significant impact on project delivery.
The lack of dedicated project staff or units in local government was one of the most frequently mentioned (24 respondents) reasons why local governments were excluded from the process of project planning and implementation. To fill staffing gaps at the local government level, hiring contractual employees through the GOI’s financial support was only a temporary solution to facilitate project delivery.
The financial viability of an organization was also a critical factor for project delivery. Although the local government’s share was decided based on its financial condition, cost increases that exceeded the allocated budget led to a conflict between different levels of government. The financial conditions of local governments became more critical at the O+M stage. Since the JNNURM focused more on the creation of infrastructure systems, the financial health of local governments had a significant influence on the quality of infrastructure system services after project completion. In many cases, the coverage and rates of the user fees were not sufficient for the local governments to generate sufficient funds to operate the system, increasing the unwillingness of local governments to take over project outcomes.
4.2.3. Individual Level
Capacity factors at the individual level can change depending on the environmental and organizational capacity, and have a significant influence on projects from the planning stage through to the O+M stage. For changes in capacity at the individual level, the JNNURM included many CD activities such as the Rapid Training Program. However, since capacity at the individual level cannot be developed in a short time, the lack of existing skills, knowledge, and experience was found to be an impediment to project delivery. Respondents rarely regarded the lack of skills and knowledge as the main reason for time and cost overruns, but this lack of capacity was related to the local governments’ reliance on external consultants. At the project planning stage, local governments were excluded from the process due to their lack of capacity, but excluding local governments from the process meant many plans were unrealistic.
In some states, inadequate skills and knowledge in local governments became a reason for the state government to postpone the transfer of functions. In these states, the state government was the main decision-maker for JNNURM projects. This situation created a structure with multiple implementing agencies that allocated JNNURM projects to mostly public corporations under the state government. This structure also created institutional overlaps, which led to other project hurdles, such as discord among government agencies and disconnections between the stages of a project cycle, which in turn had a negative influence on project delivery. The lack of skills, knowledge, and experience affected environmental and organizational capacity factors such as governance and organizational development interventions. The capacity factors at other levels also had significant influences on other capacity factors at the individual level, such as individual attitudes and ownership. For example, an institutional structure that provided limited roles for local governments dampened their willingness to engage in the project.
The previous sections explore how the capacity factors at different levels interacted with each other and shaped ‘capacity’ as a collective term. These factors were closely connected with project hurdles and constrained the project delivery in various ways. At the environment level, the ambivalent setup between empowerment of local governments and rapid implementation of projects can be regarded as the fundamental reason for the identified project hurdles. The limited time frame for the JNNURM projects did not provide the involved organizations or individuals with a learning environment for CD. The exclusion of local governments from project participation determined the entire landscape around project delivery and affected the project performance and outcomes. The influence of capacity factors on project delivery is summarized in Table 1
4.3. The Influences of Project Performance and Outcomes on Capacity Factors
The identified capacity factors have a significant influence on project delivery. Conversely, project performance and outcomes could influence CD. Baser and Morgan [4
] indicate that improved results lead to more demand, more confidence, and more resources to invest in CD, and they create a rising spiral of improvements in capacity. In the case of India’s urban sector, this spiraling influence did occur.
4.3.1. Enabling Environment
The JNNURM brought critical changes to the enabling environment, and one of these changes was a shift in perspectives. Three respondents emphasized that as the first flagship urban program in India, the JNNURM shifted the focus of the GOI to urban problems and started to mainstream this issue. Changes in urban governance can lead not only to changes in institutional capacity, but also to changes in the relationship between the public and private sectors [26
]. The program aimed to make fundamental changes in urban governance to create an enabling environment in which organizational and individual capacities could be improved. In this regard, the JNNURM led to the empowerment of local governments dealing with the urban sector and general public and provided some resources to improve their capacity.
Twenty-seven respondents talked about how the JNNURM established project procedures and clarified the roles of participating agencies involved in the projects. “Through JNNURM, we got the funds [and] we got a system [that] all the government bodies [are] involved [in].” While different levels of government agencies were involved in the JNNURM projects, the program evolved to provide a better system for project delivery and clarified the role of different government agencies. The JNNURM changed the institutional structure for project delivery, and the project performance and outcomes facilitated the adoption of systems that enhanced the capacity of the agencies involved in the program.
In addition, local governments tried new types of projects in the JNNURM and expanded their networks to include national or international contractors. One respondent commented that “There [were] so many areas … [that] we went to the market to explore the possibilities.”
4.3.2. Organizational Level
The JNNURM influenced capacity at the organizational level in India’s urban sector. Devolution has been one of the key pillars of the JNNURM for empowering local governments, but it was not implemented as intended. In states where the state government has taken on the main functions in the urban sector, there were only nominal changes in institutional structures and processes. Specialized public corporations under the control of the state government took responsibility for certain activities. These state-level public corporations were hired for the JNNURM projects and were supervised by local governments. However, the actual role of the local government was limited to transferring project funds. In such cases, the project performance and outcomes did not influence the capacity.
In contrast to the above challenges, one of the most substantial benefits of the JNNURM was the financial support for most stages of the project delivery process. Five respondents stressed the financial benefits of the JNNURM for local governments as a new opportunity. One respondent in Maharashtra emphasized that they could initiate new types of urban projects due to the financial support. In fact, the JNNURM adopted tools for cost sharing and project financing that can theoretically enhance their financial condition. However, while various tools designed to improve financial conditions were developed at the organizational level, other capacity factors, such as politics at the environmental level and knowledge at the individual level, were not supportive of these tools. At the organizational level, the intended interventions for CD were focused on temporary assistance that made minor contributions to transforming an organization’s endogenous capacity.
4.3.3. Individual Level
Project performance and outcomes influenced capacity factors at the individual level. Twenty-one respondents suggested that involvement in projects advanced CD, and seven respondents specifically stated that capacity at the individual level was improved while they were participating in a project. Regarding project hurdles, some respondents indicated that the experience gained in a project was helpful for preparing subsequent projects. They discussed solutions for the potential hurdles at the stage of proposal preparation and could adopt the solutions before their follow-up projects were launched. In some cases, the capacity to predict and solve problems was improved through project participation. A respondent in West Bengal emphasized the importance of experience in connection with permission problems: “Due to lack of experience, we are now facing these kind[s] of problems. … In (the) future, we will try to apply for central government departments’ [permission] before floating the tender.”
Respondents emphasized that local governments can acquire skills and knowledge when they participate in project implementation and collaborate with outside experts. However, the JNNURM had inherent characteristics that hindered learning and knowledge transfer. Without relevant organizational developments, such as increased staffing, many of the respondents were reluctant to take over a project, and project performance and outcomes had a negative influence on an individual’s attitude. While the JNNURM emphasized the CD of local governments, project performance without other CD interventions could conflict with the JNNURM’s CD objective.
Most project performance and outcomes provided opportunities to increase skills and knowledge at the individual level. However, the context and the existing capacity of the organization mainly determined the scope of project participation. When the existing capacity of an organization was considered insufficient to participate in the project, the organization did not have an opportunity to increase their capacity through project participation. In addition, when the O+M of the project outcome was assigned to the organization without sufficient time for the organization to improve its capacity and performance, the insufficient time affected soft capacities such as attitude, and this could reduce capacity at the individual level. The influences of project performance and program outcomes on capacity factors are summarized in Table 2